What Portals Teach Us About Rentals

I think that it is fair to say that real estate agents, brokers, and MLSs have not done a particularly good job at developing a strategy to help investors rent property, or renters find property. It is about time that we figure it out.

If you step back and look at real estate from the perspective of the consumer, rent or buy is always a consideration. Portals understand this and are providing support to the full range of the housing lifestyle. It would be a great opportunity for the industry to embrace.

Sometimes, the right financial choice is renting. As real estate goes through pricing cycles, the value equation between buying and renting changes. Buying inventory and rental inventory are co-dependent. Macroeconomic impacts of new home starts, lending, and the job market also play a contributory role.

There are many brokerages who operate property management companies today. In many cases, property management is a boon to their business when the volume in residential real estate sales is slow. However, these businesses run as separate companies that are not well integrated into the residential side of the brokerage.

Out of the nest, into a rental. It is extremely rare for young adults to move out of their parent's house and buy a home. More likely, young adults seek their first living away from home independence in a rental unit. Whether they are going to college or getting comfortable in their new job or career, renting is almost always the first step.

Today, many brokers and agents miss out on the opportunity to build a relationship with this future home buyer.

Sold my home, need to rent. The process of timing the sale of a home with the purchase of a new home is never easy. Too many factors impact the number of days it will take to sell a home as well as the number of days it will take to close on the home you purchase. In between, many home sellers seek short term rentals.

Brokers who understand this can enhance their services to sellers by arranging temporary housing between transactions. Sellers will often pay a premium for this service and appreciate you even more for handling the details.

Divorce. One of the most successful agents in Carmel, Calif. specializes in helping families who are splitting up. She is well networked in the community and also watches the divorce filings in public records. Remember that half of Americans end in divorce and this complicates the ability to afford or qualify to own a home. As a result, one or both spouses seek rentals while their finances are restructured. In most cases, single adults do not have the buying power of a married couple, which further prompts rentals.

Death. Anytime one of the homeowners pass away, there is always a consideration of disposing of the property and moving into a rental unit. Taking care of a home is expensive and hard work. Going it alone during a time of grief is often too much of a burden on the surviving spouse. Selling the home and moving into a rental is a strong consideration.

Brokers and agents who embrace this situation can play an invaluable role in supporting the surviving spouse and family to transition after the loss of a loved one.

Financial Hardship. The jobs market plays a significant role in a family's ability to afford to keep a home they own. When a homeowner loses their employment, they often lose their ability to maintain the payments on their home. Many homeowners endeavor to sell their home and move into a lower cost rental while they look for new employment.

Portals Get It! If you look at the investments made over the past few years by Zillow, Trulia, and realtor.com®, they clearly know and understand the role that rentals play in the lifecycle of homeownership. Moreover, the rental industry drives a tremendous amount of website traffic and revenue to these companies. The drive this revenue from investors who are paying to advertise their properties for rent and from ad revenue generated from pages viewed.

What's in your way? There is plenty in the way for today's broker or agent. Here are a few challenges that our industry must work through.

1. Perhaps the greatest obstacle is the Unilateral Offer of Compensation agreement of the MLS. In many areas, this agreement does not spell out compensation that is aligned with how the rental industry works.
2. Low Pay. Agents and brokers are accustomed to higher commissions from representing buyers and sellers. Commission on rentals is typically in the hundreds, not the thousands – and the process is almost the same.
3. MLS technology. Many MLS systems to not have fields and modules that are structured for handling rental units.
4. Agent and broker technology solutions do not often support the needs of professionals who represent renters and homeowners. They typically do one or the other.

Why should you fight for it? If you truly believe that consumers deserve expert real estate representation, then your belief should encompass every real estate transaction. The consumer who is putting a property up for rent needs professional protection to ensure they are abiding with the laws for landlords. The consumer who is renting a property must enter into a complex lease agreement that deserves expert support. But most of all, if you are in the residential real estate business you should embrace the totality of the lifecycle ranging from the first rental, to the first house, to the last house, and to the last rental. Customer for life.